The contracting consortium brought in to clean up Sellafield nuclear power station has performed so badly that it should be sacked if there is no swift improvement.
A report out today from the House of Commons Public Accounts Committee sets out how Nuclear Management Partners (NMP) has been handsomely rewarded for what has been a litany of failure since its appointment in 2008.
NMP is a consortium of URS, Amec and Areva. It had its contract extended last October despite spiralling costs and poor performance.
Public Accounts Committee chair Margaret Hodge said: "We have seen big delays and huge cost overruns on a number of major projects on the Sellafield site. But, despite this, NMP had its contract to clean up the UK’s largest and most hazardous site extended for five more years. Re-competing the contract was rejected as an option.
“We are seeing costs rising to astonishing levels – for example, the estimated cost of the ‘Magnox swarf storage silos retrievals’ project nearly doubled from £387m in March 2012 to £729m in September 2013.
“Cleaning up the nuclear waste on this hazardous site is estimated to cost more than £70bn in cash terms. What’s worse is that the cost is likely to continue to rise.
“The Nuclear Decommissioning Authority, which owns Sellafield and which appointed NMP, said itself that it did not expect NMP to meet its savings target for the first five years – despite NMP being on course to earn £230m for the job.
“NMP has failed to provide the clear leadership, strong management and improved capabilities for the job. There has been a high turnover of executives and NMP has failed to train staff with the right skills and experience. Instead it used expensive NMP staff – at an average cost of £300,000 per expert in 2012-2013.
“The Authority must monitor progress and terminate the contract if NMP’s performance does not improve quickly. We want the National Audit Office to review the Authority’s approach and report back to us on performance at Sellafield one year into the extended contract.
“We are not confident that taxpayers’ interests are being protected in the contractual relationships between the private companies involved in managing and operating the Sellafield site.
“The Authority has also not properly explained how it is going to deal with the large stock of plutonium stored at Sellafield at a cost of around £40m a year. It wants to build a ‘MOX’ plant for converting plutonium into fuel for nuclear power stations – but no UK power stations can use this kind of fuel. Even if they could, the cost of building and operating a MOX plant would be more than the value of the fuel produced. It just doesn’t make sense.
“The Authority now has to learn from past mistakes and make sure that that there is a comprehensive and robust business case before any decision is taken on dealing with the plutonium stockpile."
Margaret Hodge was speaking as the Committee published its 43rd Report of this Session which, on the basis of evidence from the Nuclear Decommissioning Authority, the Department of Energy & Climate Change, Nuclear Management Partners and Sellafield Ltd, examined the progress made at Sellafield since the previous Committee report in February 2013.
Sellafield is the largest and most hazardous of the nuclear sites owned by the Nuclear Decommissioning Authority (NDA). Sellafield Ltd is the licensed operator of the site and manages the site under a contract with the NDA, which reimburses its costs of around £1.6bn a year.
In 2008 the NDA appointed NMP as the ‘parent body organisation’ (PBO) of Sellafield Ltd to improve performance using its expertise. NMP receives fees earned by Sellafield Ltd for improved performance in the form of dividends, totalling £230m over the five years of the initial contract.